Abstract
This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.
| Original language | English |
|---|---|
| Pages (from-to) | 412-439 |
| Number of pages | 28 |
| Journal | Journal of Socio-Economics |
| Volume | 35 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2006 Jun |
| Externally published | Yes |
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Keywords
- Experimental economics
- Market microstructure
- Middleman
- Two-stage search
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
A middleman in an ambiguous situation-Experimental evidence. / Ogawa, Kazuhito; Koyama, Yusuke; Oda, Sobei H.
In: Journal of Socio-Economics, Vol. 35, No. 3, 06.2006, p. 412-439.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - A middleman in an ambiguous situation-Experimental evidence
AU - Ogawa, Kazuhito
AU - Koyama, Yusuke
AU - Oda, Sobei H.
PY - 2006/6
Y1 - 2006/6
N2 - This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.
AB - This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.
KW - Experimental economics
KW - Market microstructure
KW - Middleman
KW - Two-stage search
UR - http://www.scopus.com/inward/record.url?scp=33645783491&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=33645783491&partnerID=8YFLogxK
U2 - 10.1016/j.socec.2005.11.032
DO - 10.1016/j.socec.2005.11.032
M3 - Article
VL - 35
SP - 412
EP - 439
JO - Journal of Behavioral and Experimental Economics
JF - Journal of Behavioral and Experimental Economics
SN - 2214-8043
IS - 3
ER -